Institutional investors may adopt severe steps after New Wave Group AB (publ)'s (STO:NEWA B) latest 3.9% drop adds to a year losses

Key Insights

• Institutions' substantial holdings in New Wave Group implies that they have significant influence over the company's share price
• 51% of the business is held by the top 5 shareholders
• Insiders have sold recently

A look at the shareholders of New Wave Group AB (publ) (STO:NEWA B) can tell us which group is most powerful. The group holding the most number of shares in the company, around 36% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, institutional investors endured the highest losses last week after market cap fell by kr610m. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 7.2% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell New Wave Group which might hurt individual investors.

Let's delve deeper into each type of owner of New Wave Group, beginning with the chart below.

Check out our latest analysis for New Wave Group

What Does The Institutional Ownership Tell Us About New Wave Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in New Wave Group. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see New Wave Group's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in New Wave Group. With a 31% stake, CEO Torsten Jansson is the largest shareholder. For context, the second largest shareholder holds about 6.0% of the shares outstanding, followed by an ownership of 5.4% by the third-largest shareholder.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of New Wave Group

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in New Wave Group AB (publ). Insiders own kr4.8b worth of shares in the kr15b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over New Wave Group. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand New Wave Group better, we need to consider many other factors. Take risks for example - New Wave Group has 2 warning signs we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.